Underinsurance in the oil industry

by Richard Kilner

Story link: Underinsurance in the oil industry

With oil prices around the world reaching all time highs, oil companies have been warned by Marsh about the potential pitfalls of underinsurance.

Andrew George, Marsh’s managing director, has stated that any loss from the oil industry would be costlier than ever before to replace.

The high price of oil has meant that projects, such as offshore oil rigs, previously seen as not viable have been given the go ahead.

However, the high price does have a direct effect upon lead times and the cost of replacing losses, George added.

Many involved in the industry are addressing the matter, George went on, but a large number are failing to do so.

This is particularly significant as cost increases for replacement values can top 100%, meaning that without adequate insurance a major claim could also mean a major loss.